ECONOMIC EFFECTS OF IFRS IMPLEMENTATION IN SME ENTITIES

A B S T R A C T

The purpose of the research is to analyze the economic outcomes of implementing International Financial Reporting Standards (IFRS) in small and medium-sized enterprise (SME) entities in Azerbaijan, to evaluate its benefits and challenges, and to propose a solution mechanism for optimizing its application.

The methodology of the research – the research uses a mixed-method approach, including analysis of financial reporting data from Azerbaijani SMEs, along with surveys and interviews conducted with entrepreneurs.

The practical importance of the research – the proposed solution mechanisms offer practical insights for accountants and SME managers to maximize the benefits of IFRS while effectively addressing its challenges. These insights are essential for enhancing the competitiveness of SMEs and enabling their development in an increasingly globalized market. Moreover, the study provides practical recommendations for the government's role in facilitating IFRS adoption through targeted support mechanisms such as tax regulation.

The results of the research – the study identifies three main economic effects of IFRS implementation in Azerbaijani SMEs: increased financial transparency, improved creditworthiness, and expanded investment opportunities. However, SMEs face significant barriers such as high training costs for existing staff and the scarcity or high wage demands of personnel with strong IFRS knowledge.

The originality and scientific novelty of the research – this research is one of the first studies to examine the economic impact of IFRS adoption in Azerbaijani SMEs. Its scientific novelty lies in the systematic evaluation of IFRS's economic effects, the identification of specific challenges during its implementation, the development of effective strategies and policies to address them, and the analysis of its impact on the integration of SMEs into global financial markets.

Keywords: IFRS, SMEs, financial reporting, economic effects, transparency, investment.

http://doi.org/10.59610/bbu2.2025.2.2